Gold: Rural gold demand likely to rise this Akshaya Tritiya

In the spot market, gold was trading at Rs 32,000 per 10 gram.

ET Bureau | Apr 11, 2019, 07.59 AM IST

– TFM News

Kolkata: Gold sales in India’s villages might climb this Akshaya Tritiya as targeted farm welfare programmes are expected to help enhance discretionary spending on the precious metal, traditionally the preferred store of value in the hinterland.

Analysts believe that financial assistance under the PM Kisan Samman Nidhi programme should leave farmers with some surplus cash, which might be used to buy gold in the festive season. Rural India’s preferred stores of value are gold and land. “We can expect higher rural demand for gold because of the recent populist measures by the Centre and various state governments, which have boosted farm and rural income,” said Tapan Patel, senior analyst (commodities) at HDFC Securities.

Akshay Tritiya falls on May 7. Rural India buys gold ahead of Akshay Tritiya on receipt of sale proceeds from the wintersown crop. Local gold prices, therefore, usually remain firm in this season.

“Gold prices could go up depending on the movement of US interest rates and the overall condition of the US economy…. Gold is likely to be priced about $1,300-1,320 per troy ounce in the short term,” said Shekhar Bhandari, senior vicepresident and business head (global transaction banking and precious metals), Kotak Mahindra Bank.

“Also, domestic gold price depends on the level of the rupee. Keeping all these factors in mind, gold may either become dearer or cheaper by Rs 500 per 10 gm.”

In the spot market, gold was trading at Rs 32,000 per 10 gram. Prices trended lower on Wednesday as the dollar firmed against the rupee, although the metal remained near a twoweek peak hit in the previous session. Internationally, spot gold was down 0.1 per cent at $1,302.36 per ounce. US gold futures slipped 0.2 per cent to $1,306 an ounce. Equities slipped on mounting concerns over global growth.

“…global growth concerns on Brexit and the trade war are bullish factors for higher international gold prices, which would limit the downside in India,” Patel said.

“We expect gold prices to trade higher in the medium term, with resistance at Rs 32,800. Above this level, prices may head toward Rs 34,450, with strong support at Rs 31,500.”

Source

TFMNews | The Future Markets

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Wireless Telecom company ‘SK Telecom’ unveils 5G mobile edge computing open platform

South Korea’s major wireless telecom operator is opening up its 5G mobile edge computing platform to third parties and enterprise customers.

by Kendra Chamberlain on FierceWireless

TFMNews

SK Telecom unveiled its mobile edge computing (MEC) open platform, which it says can enhance response times in 5G data communications. The operator plans to open up its MEC platform to enterprise customers to enable them to offer new services.

MEC, which will be used in 5G networks to deliver ultra-low latency data, enables operators to cut down on latency by installing tiny data centers at 5G base stations. SK Telecom says MEC can cut latency by 60%. Applications such as AR/VR services, cloud gaming services, autonomous driving and fleet management, and real-time live broadcasting will all make use of MEC in 5G networks. 

“By opening up the ‘5G Mobile Edge Computing Platform’, SK Telecom will secure the basis for expanding the MEC-related ecosystem and accelerating the release of 5G services,” said Park Jin-hyo, CTO of SK Telecom, in a statement. “SK Telecom will join hands with diverse companies throughout the globe to boost the adoption of MEC-based services.”

SK Telecom is releasing an API that enterprise customers can use to develop MEC-based 5G services. The company is betting enterprise customers can use the platform to improve efficiency and QoE by reducing latency in communications. A smart factory, for example, can use the MEC platform and a 5G network to increase response time of manufacturing robots.

At Mobile World Congress this year, the operator teamed up with MobiledgeX to demo a MEC-based industrial AR service. SK Telecom is also working with the Telecom Infra Project (TIP), the Facebook-backed tech initiative, to build out an ecosystem for MEC developers.

SK Telecom also successfully conducted a 4G-5G network dual connectivity test with Samsung, using Samsung’s E-UTRAN New Radio Dual Connectivity (EN-DC) tech, which is based on the 3GPP 5G NR standard.

The test checked network device interoperability using dual connectivity technology on 4G and 5G networks using Samsung’s Galaxy S10 5G smartphone and its virtual core (vCore) product that supports 4G and 5G simultaneously. The companies were able to achieve data rates of 2.65 Gbps on a 5G smartphone, with 1.5 Gbps coming from 5G using 3.5 GHz frequency and 1.15 Gbps coming from LTE using 1.8 GHz, 2.1 GHz, and 2.6 GHz frequencies.

SK Telecom says the technology can be used to improve transmission data speed by 80% by leveraging the 4G and 5G dual connectivity.

Source: FierceWireless

– TFM News

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Dh28 billion surplus in 2018 revenue: UAE Govt

UAE Govt reported Dh28 billion surplus in 2018 revenue

The surplus surge is accredited to the rise in the UAE government’s revenues.

By GulfnewsTFMNews

Abu Dhabi: The UAE government’s surplus posted Dh28 billion in the first nine months of 2018, according to the latest figures released by the Federal Competitiveness and Statistics Authority.

The surplus increase is attributed to the rise in the UAE government’s revenues, which hit Dh304.5 billion in 2018’s first nine months, an increase of 4.8 percent compared to the same period of 2017.

Meanwhile, the expenditures increased from Dh259.3 billion to Dh276.2 billion during the same monitoring period. Total current expenditure as well as capital expenditure also increased by 4.8 per cent in the third quarter of 2018, resulting in the net operating balance recording a deficit of Dh2.5 billion in the third quarter of 2018, compared to a surplus of Dh21.7 billion in the previous quarter.

Oil prices improvements in the second and third quarters of 2018 as well as ongoing fiscal reforms have contributed to diversifying non-energy revenues sources, raising the total government revenues.

Source: GulfNews

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Kuwait increases April KEC crude price by 40 cents/bbl for Asia Region

Kuwait increases April KEC crude price by 40 cents/bbl for Asia Region

The OSP for Kuwait Super Light Crude (KSLC) to Asia was set at a premium of $1.65 a barrel to the average of Platts Oman and Dubai prices.

By ReutersTFM News

Image used for illustrative purpose. Kuwait Oil Tanker employees oversee the loading of crude oil into the new Kazimah III Oil Tanker at Ahmadi North Pier in Kuwait.
REUTERS/ Stephanie McGehee

DUBAI- Kuwait has raised the April official selling price (OSP) for Kuwait Export Blend Crude (KEC) by 40 cents to plus 55 cents a barrel to the average of Oman and Dubai prices reported by Platts, a document reviewed by Reuters showed on Monday.

The OSP for Kuwait Super Light Crude (KSLC) to Asia was set at a premium of $1.65 a barrel to the average of Platts Oman and Dubai prices.

The KEC prices by region are as follows: Region APRIL

Asia Oman/Dubai +$0.55/bbl

NW Europe DTD -$4.20/bbl

Mediterranean DTD -$2.90/bbl

United States ASCI +$0.95/bbl

Source: Reuters

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Saudi stands by OPEC supply cuts; Oil price rose more than 1%

Saudi stands by OPEC supply cuts; Oil price rose more than 1%

Saudi Energy Minister Khalid al-Falih told Reuters on Sunday it might be too early to alter a production curb written agreement united by the Organization of the fossil fuel commerce Countries and allies as well as Russia before the group’s meeting in June.

By Reuters – TFM News

NEW YORK (Reuters) – Oil prices rose more than 1 percent on Monday, lifted by comments from Saudi Energy Minister Khalid al-Falih that an end to OPEC-led supply cuts was unlikely before June.

Brent crude futures were up 84 cents, or 1.28 percent, to settle at $66.58 a barrel.

U.S. West Texas Intermediate (WTI) crude futures rose 72 cents, or 1.28 percent, to settle at $56.79 a barrel, a 1.28 percent.

Saudi Energy Minister Khalid al-Falih told Reuters on Sunday it might be too early to alter a production curb written agreement united by the Organization of the fossil fuel commerce Countries and allies as well as Russia before the group’s meeting in June.

“The Saudis continue to take a proactive approach to get supply and demand in better balance,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

Oil markets have been supported this year by the ongoing supply cuts by the group called OPEC+, which has pledged to cut 1.2 million barrels per day (bpd) in crude supply since the start of the year to prop up prices.

The cluster can meet on April 17-18, with another gathering scheduled for June 25-26, to discuss supply policy.

OPEC is expected to review global oil demand and supply balance as the group maintains production cuts during the April meeting, a senior Gulf oil official said on Monday.

“We want to see commercial stocks down,” the official said on the sidelines of IHS Markit’s CERAWeek energy conference.

The official added that global crude and oil products stocks should fall back to a five-year average, a target the group had set to drain a global oil glut.

In addition, a Saudi official said the country planned to cut crude oil exports in April to below 7 million barrels per day.

Prices were also buoyed by U.S. energy services firm Baker Hughes latest weekly report showing the quantity of rigs drilling for brand spanking new drilling within the us fell by 9 to 834.

But the Paris-based International Energy Agency said in an outlook on Monday that crude output in the United States will rise nearly 2.8 million bpd to 13.7 million bpd in 2024 from about 11 million bpd in 2018.

U.S. oil production could become less responsive to crude prices as major oil companies expand operations in the nation’s shale fields, IEA officials said at the CERAWeek energy conference in Houston on Monday.

Markets were pressured after U.S. employment data on Friday raised concerns that an economic slowdown in Asia and Europe was spilling into the United States.

“Brent prices have struggled to push firmly above $65/bbl in part because a strong U.S. dollar remains a major headwind for commodity prices. In addition, global GDP growth has been soft and oil demand has yet to pick up seasonally,” Bank of America Merrill Lynch said in a report.

But citing the OPEC+ cuts and low global stocks, the bank predicted prices for Brent would reach $70 a barrel this year.

Source: Reuters

– TFM News

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India announced seven-phase national elections to be held in April and May

India announced seven-phase national elections to be held in April and May

The number of registered voters stood at around 900 million, Sunil Arora said. This is around 84.3 million more than in the 2014 elections, he said, adding that there are around 15 million new voters in the 18-19 years age group this time.

TFM News

Sunil Arora announces dates for the general elections, in New Delhi on March 10.Photographer: T. Narayan/Bloomberg

The election commission of India (ECI) on March 10th declared dates for a seven-phase national elections.

The polls to form the 17th Lok Sabha, the lower house of parliament, will be held on April 11, 18, 23, and 29, and May 06, 12, and 19, the ECI has said. The results of the elections will be declared on May 23, Sunil Arora, the chief election commissioner, said at a media briefing in New Delhi, the national capital.

Phase Date

Constituencies

I April 11 91 constituencies across 20 states (Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Jammu & Kashmir, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Telangana, Tripura, UP, Uttarakhand, West Bengal, Andaman & Nicobar, Lakshadweep)
II April 18 97 constituencies across 13 states (Assam, Bihar, Chhattisgarh, Jammu & Kashmir, Karnataka, Maharashtra, Manipur, Odisha, Tamil Nadu, Tripura, Uttar Pradesh, West Bengal, Puducherry)
III April 23 115 constituencies across 14 states (Assam, Bihar, Chhattisgarh, Gujarat, Goa, Jammu & Kashmir, Karnataka, Kerala, Maharashtra, Odisha, Uttar Pradesh, West Bengal, Dadra & Nagar Haveli, Daman & Diu)
IV April 29 71 constituencies across 9 states (Bihar, Jammu & Kashmir, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Uttar Pradesh, West Bengal)
V May 06 51 constituencies across 7 states (Bihar, Jammu & Kashmir, Jharkhand, Madhya Pradesh, Rajasthan, Uttar Pradesh, West Bengal)
VI May 12 59 constituencies across 7 states (Bihar, Haryana, Jharkhand, Madhya Pradesh, Uttar Pradesh, West Bengal, National Capital Territory of Delhi)
VII May 19 59 constituencies across 8 states (Bihar, Jharkhand, Madhya Pradesh, Punjab, West Bengal, Chandigarh, Uttar Pradesh, Himachal Pradesh)

Of the 545 seats in all, two are reserved for the Anglo-Indian community, to which the president of the country nominates members.

The number of registered voters stood at around 900 million, Arora said. This is around 84.3 million more than in the 2014 elections, he said, adding that there are around 15 million new voters in the 18-19 years age group this time.

There will be approximately one million voting booths during these elections and around 11 million personnel who will be part of the electoral machinery.

“VVPATs (voter verifiable paper audit trail) will accompany EVMs (electoral voting machines) in all polling booths this election,” Arora said, referring to the EC’s chosen method of providing feedback to voters.

The announcement of the election dates also immediately brings into effect the ECI’s model code of conduct. essentially rendering the Modi government lame duck. This code is a set of guidelines and rules to ensure free and fair conduct of elections and the campaigning preceding it. The code will remain effective till the day the results are announced. These guidelines includes a bar on the use of religious and caste sentiments to seek votes and announcement of fresh projects and schemes by the government.

“Any violation will be dealt with in the strictest manner,” Arora said.

There will be approximately one million voting booths during these elections and around 11 million personnel who will be part of the electoral machinery.

“VVPATs (voter verifiable paper audit trail) will accompany EVMs (electoral voting machines) in all polling booths this election,” Arora said, referring to the EC’s chosen method of providing feedback to voters.

The announcement of the election dates also immediately brings into effect the ECI’s model code of conduct. essentially rendering the Modi government lame duck. This code is a set of guidelines and rules to ensure free and fair conduct of elections and the campaigning preceding it. The code will remain effective till the day the results are announced. These guidelines includes a bar on the use of religious and caste sentiments to seek votes and announcement of fresh projects and schemes by the government.

“Any violation will be dealt with in the strictest manner,” Arora Said.

Source: Quartz India

– TFM Watch

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India State-run electricity distribution companies (discoms) posted losses over Rs.15,000 crore in the first half of FY19

India State-run electricity distribution companies (discoms) posted losses over Rs.15,000 crore in the first half of FY19

  • The UDAY schem has gone under a cloud as there is stagnation in the improvement of different operational parameters.
  • Losses of the discoms in Telangana, Tamil Nadu, Madhya Pradesh, Assam and Andhra Pradesh dramatically increased during first half of FY19 throughout the earlier year first half.
Financial Express – TFM Watch

energy.jpg

State-run power conveyance organizations (discoms) detailed budgetary losses of over Rs.15,000 crore in the first half of this financial – as much as the losses brought about by them during the entire last year – flagging an inversion of a declining pattern since the UDAY plot for these substances’ recovery was propelled in November 2015 and a conceivable unravelling of the plan itself.

Losses of the discoms in Telangana, Tamil Nadu, Madhya Pradesh, Assam and Andhra Pradesh dramatically increased during H1FY19 over earlier year first half, as indicated by an ongoing influence service report checked on by FE. Under UDAY, monetary losses of the discoms in 27 states have tumbled to Rs.15,049 crore in FY18 from Rs.36,905 crore in FY17 (Rs.51,480 crore in FY16), on account of the funds made through lower intrigue costs.

The UDAY plan’s viability goes under a cloud likewise in light of the fact that there is inactivity as for the various operational parameters it was intended to improve. The total specialized and business (AT&C) misfortunes – power units lost by virtue of pilferage – of discoms in 26 states and UTs were at 19.8% toward the finish of December 2018, down just 0.7 rate point from the dimension recorded a year sooner.

The objective to reduce these losses to 15% before the finish of March 2019 is plainly going to be missed by a huge edge. Increment in power buy and establishment costs, low gathering from remotely found shoppers (particularly after the family unit charge drive under the Saubhagya plot), inadequate tax climbs, moderate endowment distributions from the individual state governments and rising levy from the administration offices have been the fundamental explanations behind the plan losing energy.

State administrations of 16 states have taken over around Rs.2.32 lakh crore obligation of their discoms according to UDAY conditions, bringing about a bringing of the financing costs down to 7-8.5% from around 11-12%. Reserve funds through lower control buy cost, foundation cost and duty defense and improvement in charging proficiency additionally added to the misfortune decrease. Be that as it may, these endeavors are believed to invert with expanding entrance of power.

Remarkable payment from various bureaus of state governments to the discoms have expanded 21% every year to Rs.40,580 crore during H1FY19. The greatest slow pokes on this front are Uttar Pradesh (duty of Rs.12,166 crore), Maharashtra (Rs.6,084 crore), Telangana (Rs.4,143 crore), Andhra Pradesh (Rs.4,143 crore) and Chhattisgarh (Rs.2,011 crore).

Power controllers not raising force levies as per the direction concurred while marking into UDAY has likewise added to the discoms’ weight. Just 17 states have expanded their taxes for FY19 contrasted with 22 for FY18.

Source: Financial Express

– TFM Watch

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India: Govt announce a subsidy up to Rs 2.5 lakh on 60,000 electric vehicles

India: Govt announce a subsidy up to Rs 2.5 lakh on 60,000 electric vehicles: Report

Capital will be focused towards making electric 2 and 3-wheeler vehicles and public transport buses.

TFM Watch

MahindraEVarito-09.jpg

The Centre presents subsidy up to Rs 2.5 lakh for 60,000 electric vehicles and a dole of Rs.20,000 for 20,000 half and hybrid vehicles that are purchased in the following three years. The Rs.10,000 crore plan will give the green fuel which is the necessary push in India.

Sources disclosed to The Times of India that the greater part of the capital in this plan will be added to electric 2 and 3-wheeler vehicles and public transports. This plan is also open for e-rickshaw drivers.

Thus, after this move is declared, somebody keen on purchasing Mahindra E-Verito will get a sponsorship of around Rs.1.5 lakh, while a decent quality electric bike can get an subsidy of Rs.40,000. The sponsorships for transports would be up to Rs.60 lakh.

This proposition might be taken up by the Cabinet on February 28 as a component of the second period of Faster Adoption and Manufacturing of (Hybrid and Electric Vehicles) India (FAME) conspire. The administration needs to see quick outcomes on the electric vehicles front, hence, it multiplied assignment to the plan from the prior Rs.5,500 crore.

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This endowment will become effective in April. Under this plan, the legislature will likewise top ex-processing plant cost of a vehicle, with the exception of transports, to benefit the appropriation, at Rs.15 lakh. The sponsorship for any vehicle will be determined based on its battery limit — Rs.10,000 for each KWh for all vehicles and Rs.20,000 for each KWh for transports.

This appropriation will make two and three-wheeler electric vehicles will be attractive to buyers as it would finish up cutting down their expenses comparatively petroleum vehicles. “There will be an immense focus on extending the charging framework in cities and along highways to fulfil the need. Another spotlight territory will be on developing our ability to create lithium-ion batteries for vehicles,” the source told the paper.

Source: MoneyControl News

– TFM Watch

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Beijing City Govt to raise 10 billion yuan ($1.5 billion) from prospective investors

Beijing city government to raise 10 billion yuan ($1.5 billion) from prospective investors

It was planned by Beijing’s civil State-owned Assets Supervision and Administration Commission (SASAC)

Reuters

 

Beijing.jpg

HONG KONG (Reuters) – A venture firm supported by the Beijing city government is in discussion with imminent investors to raise more than 10 billion yuan ($1.5 billion) in its first fund pointed principally at forefront tech ventures, said two individuals with direct knowledge.

Beijing Innovation Industry Investment Co’s raising money move underscores the Chinese capital city’s push to make up with different urban areas in the nation, most remarkably Shenzhen, in seeking after technology and industrial upgrading developments.

It comes as China plans to accelerate improvement of its technology part, including sections like semiconductors and artificial intelligence, in focus of a aggressive trade remain off with the United States that has exhibited the nation’s dependence on imported technology.

China’s State Council in 2016 endorsed a 200 billion yuan funding store here, financed by state controlled elements, to put resources into new innovations. Beijing Innovation couldn’t be quickly gone after remark.

It was planning by Beijing’s civil State-owned Assets Supervision and Administration Commission (SASAC), which regulates the city’s state-owned undertakings, and has been entrusted with making interests in new-economy segments in the interest of the local government.

Beijing Invention has pulled in the neighbourhood SASAC and a few local government-sponsored organizations like Shenzhen Capital Group, the venture investment vehicle of the Shenzhen government, as financial specialists, as indicated by household media reports and open corporate vault filings. It will search for direct-value venture openings in divisions running from data innovation and incorporated circuits to electric vehicles and new materials, as indicated by household media reports.

As a noteworthy tech center point in China, Beijing, where ByteDance Technology, one of the world’s most significant new businesses, online sustenance conveyance to-ticketing administrations firm Meituan Dianping and web based business firm JD.com are headquartered, has for a considerable length of time did not have a merged venture arm under the neighborhood government for tech bargains.

Conversely, Shenzhen which has reproduced organizations, for example, internet gaming-to-web-based social networking mammoth Tencent Holdings, telecoms gear creator Huawei Technologies and automaton producer DJI, has Shenzhen Capital Group putting resources into the tech part for a long time.

Shenzhen Capital Group has more than 333 billion yuan of advantages under administration, its site shows, and holds a 15 percent stake in Beijing Innovation, as indicated by open exposures.

Reported by Julie Zhu and Kane Wu; Editing by Muralikumar Anantharaman

Source: Reuters

– TFM Watch

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HP Global Investors meet: 159 MoUs signed with Rs.17,000 crore investment commitment

Himachal Pradesh investors meet: 159 MoUs signed with Rs.17,000 crore investment commitment, says CM Jai Ram Thakur

Stating that such initiatives were never taken before in the state, the CM said efforts would be made to ensure clearances for projects faster.

TFM Watch

Jai_Ram_Thakur_PTI.jpg

As many as 159 memorandum of understandings (MoUs) were signed on Monday at the HP Global Investors Meet, Chief Minister Jai Ram Thakur said. Presiding over the MoU-signing ceremony at the Meet, Thakur said the MoUs would ensure a total investment of over Rs.17,000 crore and employment opportunities to over 40,000 people.

Among the major pacts, Thakur said three MoUs were signed with public sector undertakings for an investment amount of Rs.1,115 crore, 88 with the Department of Industries for Rs.5,243 crore investment; 36 with the Department of Tourism and Civil Aviation for Rs.2,810 crore funding; 17 with the Department of Urban Development (Rs.4,332 crore).

The state government is coming up with new policies for industry, tourism, warehouse and logistics, among others, to provide incentives to the entrepreneurs interested to invest in the state, he added.

Stating that such initiatives were never taken before in the state, he said efforts would be made to ensure clearances for projects faster.

A holistic approach has been adopted by the state government to attract investment in the state, he said adding that apart from industries, MoUs have also been signed in tourism, wellness, transport, housing, language, art and culture sectors.

Source: PTI

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Ecuador inks $4.2 billion financing deal with IMF: President Lenin Moreno

Reuters: Ecuador inks $4.2 billion financing deal with IMF: President Lenin Moreno

Moreno said the maturities on the loans extended “up to 30 years” and that the interest rates “on average” did not exceed 5 percent.

TFM Watch

Lenin-Moreno-770x433.jpg

Ecuador has reached a $4.2 billion staff-level financing deal with the International Monetary Fund (IMF), President Lenin Moreno said on February 20, as the Andean country grapples with a large fiscal deficit and heavy external debt.

The country will also receive $6 billion in loans from multilateral institutions including the World Bank, the Inter-American Development Bank, and the CAF Andean development bank, Moreno said in a message broadcast on national television and radio.

Ecuador’s sovereign bonds surged last week after the IMF confirmed it was engaged in formal talks with Moreno over a possible financial arrangement. Staff-level agreements between the IMF and member countries are subject to approval by the Washington-based lender’s executive board.

The OPEC nation’s debt grew under former leftist President Rafael Correa. Moreno earned Correa’s support during the 2017 election campaign, but has implemented more market-friendly economic policies since taking office.

Moreno said the maturities on the loans extended “up to 30 years” and that the interest rates “on average” did not exceed 5 percent.

“This money will create work opportunities for those who have not yet found something stable,” he said.

Moreno has begun to implement an austerity plan that includes layoffs of workers at state-owned companies and cuts to gasoline subsidies, also plans to find a private operator for state-run telecoms company CNT and other state-owned firms.

In his address, Moreno said most of the money would be dedicated to “social investment,” citing a rising number of police officers and promising retirees they would not lose out on an annual bonus.

Skepticism of the IMF runs strong in Ecuador and throughout Latin America, where many blame Fund-imposed austerity policies for economic hardship.

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Govt approves ₹48239 cr recap to 12 PSBs

Govt comes to the rescue of 12 PSBs, to pump in Rs.48,239 cr

Corporation Bank gets the highest infusion of Rs.9,086 crore while Bank of Maharashtra gets the lowest at Rs.205 crore.

Gove to Pore Psu.jpg

The government on February 20, announced final recapitalisation tranche amount of Rs.48,239 crore for as many as 12 public sector banks, in a bid to take them out of Reserve Bank of India’s (RBI) prompt corrective action framework.

The 12 banks are Allahabad Bank, Corporation Bank, Bank of India, Bank of Maharashtra, Punjab National Bank, Union Bank, Andhra Bank, Syndicate Bank, Central Bank, United Bank, UCO Bank and IOB.

In a tweet, Rajeev Kumar, secretary, Department of Financial Services said that the banks would receive the capital to “equip better performing PCA banks to be above regulatory capital threshold, to help banks that are out of PCA to remain so and equip non PCA banks to stay above regulatory norms of PCA”.

As per the recapitalisation drive, the government has categorised the banks in three categories with respect to their capital position as against that required by the RBI.

 

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The government had initiated a mega recapitalisation drive in October, 2017 announcing infusion of Rs 2.11 lakh crore in banks by way of capital. Of this Rs 1.35 lakh crore was through recap bonds, Rs 18,000 crore via budgetary support and rest as to be raised via market operations.

As of December, 2018 government has infused Rs 51,533 crore via budgetary allocation and recap bonds.

Lending ability of as many as 11 PSBs was contained by the RBI when they were put under the PCA framework. The restrictions under the framework, which included restriction on dividend distribution, restriction on branch expansion, restriction on management compensation and director’s fees, could be imposed as and when the banks would breach various regulatory threshold limits.

As per RBI, a bank’s financial position was to be analysed based on its capital, asset quality and profitability. Banks were required to maintain capital to risk asset ratio at 10.25 percent, net non-performing advance ratio at least below six percent and maintain profitability for two consecutive years.

The government and the RBI were found to be at loggerheads with each other due to strict regulatory requirements imposed by the apex bank. Centre had contested that common equity ratio (CER), as specified by the RBI, was higher than the global norms.

CER, a measure to gauge the bank’s ability to absorb loss, is 4.5 percent as per globally accepted Basel III norms. This is 5.5 percent for India. Similarly, minimum Tier-I capital ratio is six percent as per Basel-III norms but 7 percent for India and minimum total capital ratio is eight percent as per Basel norms but nine percent for India.

The government and banks had lobbied to bring down the regulatory requirement, reasoning that norms must be “in line with global standards”. The Central bank, however, refused to budge stating that Indian banks need to be “strong” in case they absorb losses due to mounting non-performing assets.

The NPAs were close to Rs 10 lakh crore at the end of March 2018, of these over Rs 9.62 lakh crore were in PSBs.

NPAs, however, have shown negative trend in FY19 and have reduced by Rs 23,860 crore between April-September 2018. Banks have also been able to recover Rs 60,726 crore during the same period. The recovery is more than double the amount recovered in the corresponding period last year.

The RBI, in its bi-annual Financial Stability Report (FSR) said NPAs in the banking sector may reduce from 10.8 percent (registered in September 2018) to 10.3 percent by March 2019 and further to 10.2 percent by September 2019. The ratio was 11.5 percent at the end of March 2018.

On January 31, RBI invoked PCA restrictions on three banks – Bank of Maharashtra, Bank of India and Oriental Bank of Commerce – after their improved Q3 performance, leavng eight PSBs under the PCA framework.

While, BoM witnessed a fall in Net NPA ratio from 10.61 percent (Q2) to 5.91 percent (Q3), BoI’s net NPA ratio fell from 7.64 percent to 5.87 percent. OBC reduced its NNPA from 10.07 percent to 7.15 percent.

The government during the revised budget of 2018-19 had upped the recap bond allocation from Rs 65,000 crore to Rs 1.06 lakh crore.

Kumar said that government has infused Rs 1.01 lakh crore in FY19 and has “withheld Rs 5,000 crore as cushion in case further recap is required”. He said that the government was eyeing recoveries worth Rs 1.8  lakh crore in 2018-19.

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